Microinsurance within the Financial Inclusion and Sustainability Framework
1st Microinsurance Conference Egypt
21-23 March 2022, Luxor
Microinsurance in Egypt has seen substantial growth in the past five years and plays a key role in achieving the Sustainable Development Goals (SDGs). At the 1st Microinsurance Conference of the Insurance Federation of Egypt (IFE), experts discussed how to accelerate market development in light of the upcoming regulatory changes for microinsurance.
With over 100 million inhabitants, Egypt has the third-largest population in Africa. Of the country’s working population, about 27% are considered to be informally employed and 40% are self-employed. In his opening speech, IFE Chairman, Alaa El-Zoheiry, therefore underlined the fact that MSMEs are the backbone for a strong economy in the country. MSMEs received loans totalling EGP 27.1bn by the end of 2021 compared to EGP 19.4bn at the end of 2020, with a growth rate of over 40%. The number of microfinance beneficiaries has reached 3.5 million, compared to 3.2 million at the end of 2020, with a growth rate of 9.4%.
Credit life insurance became mandatory for microloans in 2018, which helped to boost the microinsurance market in the country. The microfinance sector has also contributed to women’s empowerment, as women represent 62% of the total number of beneficiaries. According to the IFE, these indicators highlight the fact that the availability of insurance protection gives the opportunity for more innovation and productivity for MSME owners.
A number of challenges still stand in the way of promoting microinsurance in Egypt. The most significant seems to be the lack of efficient distribution channels to reach the target customers as well as the lack of (statistical) data, resulting in difficulties in determining pricing. The rapid development of digital solutions creates a lot of new opportunities to develop new products and reduce costs. Partnerships between tech companies and distribution channels as well as insurance providers are promising approaches to increase outreach and reduce costs. (see interview).
Access to insurance as a step to achieving the SDGs
The way forward
The insurance industry in Egypt is now preparing a comprehensive insurance bill. The new regulation is currently being discussed and is due to become law shortly. The proposed legislation sets rules for microinsurance distribution and will allow the creation of special microinsurance companies allowed to sell both life and non-life insurance. In addition, the FRA aims at improving reporting in order to increase financial stability as well as collect all the accurate statistical data relating to microinsurance, covering various dimensions including the number of policies, the number of clients, premiums and compensation paid. And finally the FRA will increase its efforts to raise awareness for insurance. By 2026 the results of those efforts will be reviewed.
The 1st Microinsurance Conference was certainly not the last event the IFE will host to facilitate the development of microinsurance by providing a platform to exchange knowledge and experience not only within the country but also among countries in the region.
Fawry, one of the largest Fintechs in Egypt, provides digital payment services and has an insurance arm, Fawry insurance brokerage. We spoke with Menna Alla Hegazy, Founder and General Manager.
I am very excited about the expected new insurance law that will allow more opportunities for microinsurance penetration.
How did you get into microinsurance?
What does Fawry do today in the field of microinsurance?
What were your main lessons learned from the conference?
I was assured how the Egyptian government is serious about financial inclusion. It was very interesting to see the Egyptian Post with its vast network planning to promote microinsurance, and I am very excited about the expected new insurance law that will allow more opportunities for microinsurance penetration.